Netflix stock just quietly hit a new all-time high. 5 reasons why it could have further to climb.

When it comes to video streaming, there is Netflix (NFLX 1.28%) — and then there’s everyone else. The company is the undisputed pioneer in Internet television and remains the one to beat in many ways. While the streaming wars have largely faded from view in recent years, Netflix continues to be the dominant player in the space.

Netflix hit a new all-time high this week, surpassing $700 per share and quietly eclipsing the previous watermark set at the end of 2021. This adds to its already monumental gains. Since its IPO in early 2002, Netflix shares are up 63,725% as of Wednesday’s close.

While Netflix has largely stayed out of the limelight in recent years, there’s reason to believe the stock still has room to climb.

Image source: Getty Images.

1. Netflix’s advertising business is growing like gangbusters

Earlier this month, Netflix made waves when the company revealed the results of its “upfronts.” This age-old practice brings together television network executives and major advertisers. During these annual meetings, “media companies try to sell the bulk of their commercial inventory — typically as much as 70 percent to 80 percent — before the next programming cycles,” according to the entertainment industry publication. Variety.

Netflix walked away from this year’s event, posting 150% year-over-year gains in ad sales as its ad-supported plan takes off. Advertisers have been drawn to some of the company’s flagship programs, and its continued foray into live events has also helped (more on that in a bit).

2. Lots of hit shows

What attracted advertisers — and continues to drive subscription growth — are Netflix’s hit series, and there are plenty to choose from. Squid game tops the list of the company’s most popular series, as well as Wednesday. Other perennial favorites include Strange stuff, Bridgerton, Theft of money, Crown, and Umbrella Academy.

Recent favorites include outer banks, american crime, Ripley, Reindeer babyand Emily in Paris. There’s more, but you get the idea.

3. More sports programming

One of the most notable changes in recent memory is Netflix’s shift in view of live sports. For a long time, the company stuck to sports documentaries, but its strategy is evolving.

Netflix has hosted its own golf tournament and tennis match, dubbed The Netflix Cup and The Netflix Slam, respectively, while extending its toe into sports programming. He must have liked what he saw.

Earlier this year, Netflix announced that it would become the exclusive home of WWE Crude starting from January 2025. Crude has long been a staple for wrestling fans, watched by more than 1 billion households worldwide in 25 languages, according to the company. Before moving to Netflix, Crude appointed ComcastHome of USA Network, where it reigned as the channel’s biggest draw.

The other big sports headline is that Netflix will give soccer fans a big Christmas present. On December 25, 2024, the company will air two of the National Football League’s (NFL) biggest holiday matchups: Super Bowl LVII winner Kansas City Chiefs vs. Pittsburgh Steelers, as well as Baltimore Ravens vs. Houston Texans. The company also mentioned that it will host at least one game each on Christmas Day 2025 and 2026.

New viewers may come for the football and stay for other entertainment.

4. Growing subscriber base

The key to Netflix’s success has always been — and always will be — its ability to attract subscribers, either at the company’s full-price tier or its cheaper ad-supported tier. Despite strong competition in recent years from the likes of Amazon Prime Video, Walt DisneyDisney+, Hulu and The discovery of Warner Brosamong others, Netflix remains the king of video streaming.

In the second quarter, Netflix grew its paid streaming members to 278 million, up 17% year over year. In fact, year-over-year subscriber growth has accelerated for six consecutive quarters after bottoming out at the end of 2022. The acceleration is largely due to the addition of its ad-supported tier at the end of 2022 and the crackdown on passwords in early 2023. Netflix announced earlier this year that its ad-supported level has surpassed 40 million members, helping to boost its aforementioned success in the advertising market.

The company’s accelerated growth suggests Netflix has what viewers want.

5. Growing revenue and higher profits

Netflix’s ability to attract subscribers and the company’s pricing power have propelled the company’s revenue and profits to higher heights.

Despite last year’s economic struggles, Netflix grew revenue by 7% in 2023, while earnings per share (EPS) increased by 21%. This year started even better, as revenue and EPS rose 16% and 65%, respectively, in the first six months of 2024.

This helps illustrate the beauty of Netflix’s operating model, as each new subscriber drops more profits into the bottom line.

I’m not the only one who thinks so

I’m a longtime Netflix bull who thinks the world is the company’s streaming oyster — but don’t take my word for it. Wall Street is equally optimistic about the streaming pioneers’ future potential. Of the 46 analysts who provided an opinion in July, 29 rated the stock a buy or strong buy and none recommended a sell.

Pivotal Research analyst Jeff Wlodarczak is among the company’s biggest fans, with a buy rating and $800 price target on the stock. This represents an additional 16% increase from Thursday’s closing price.

In a report titled “This is what winning looks like,” the analyst opines that “it’s abundantly clear that Netflix is ​​demonstrating massive scale as it continues to produce strong subscriber results and free cash flow, with the ability to invest to accelerate that growth . ” The analyst goes on to say that Netflix has “clearly won the global streaming wars.”

Given the company’s decided upside, industry dominance, and financial performance, it’s pretty clear that Netflix stock is a buy.